Managing the Direct Marketing Supply Chain

Article |
Fri, 07/30/2010 - 23:12

Managing the Direct Marketing Supply Chain Jim Boring

Once upon a time, a direct marketer would come up with an offer for a particular market segment, work with a list provider to focus on likely recipients, have its advertising agency develop a package for the offer, send the package off to its printer, and then mail it.

The system had the advantage of being fairly straightforward; each element in the supply chain could be measured according to its own criteria, and the whole project could be measured by ROI.

That was then. Nowadays, a direct marketing offer can reach its potential customers through print mailings, e-mail blasts, Website offerings, television advertising, Internet promotions, social media, and the rest of the traditional and new media channels. Indeed, the supply chain itself now extends beyond mailing to include order taking, fulfillment, and customer service.

To further complicate matters, each element of the supply chain has become a sophisticated area of expertise, which requires corresponding expertise from the direct marketer to properly vet and select among suppliers. Unless the direct marketer has its own expertise on staff—adding a layer of cost and management—the marketer is dependent on outside consulting organizations to perform the necessary supplier acquisition process.

Globalization and virtualization (in the sense that a worldwide array of production resources is now a virtual community) have enabled direct marketers to precisely match production capabilities to a particular project. They are no longer dependent on the capabilities of a single printer, and the convenience of having a local supplier has been eclipsed by the cost savings inherent in a world of suppliers competing with each other for their business.

Consultation on list definition and management, postal regulatory counsel, package design, and data analysis—all these areas of expertise are now available from companies based anywhere in the country or the world. Virtualization has made every supplier easily accessible and available.

These phenomena—globalization and virtualization—have given rise to new players in the direct marketing business. In response to the need of direct marketers and to the difficulty of selecting from such a broad range of choices, and taking advantage of unique production facilities, a class of marketing support companies has come into being. While some of these companies simply act as a negotiating interface with potential suppliers, others are deeply involved in the vetting process. These latter companies narrow selection to a more manageable number of highly qualified potential suppliers and become directly involved in project management. Some go even further and take on such tasks as assuring the financial stability of suppliers.

The most ambitious of this class of companies provide expertise across all the various print and digital media. How well they accomplish this tricky feat depends on their own history. Those grown from the print side of direct marketing tend to be better on that side of the equation, while those with digital roots favor the electronic media.

In either case, a direct marketer can use such companies as expert managers of the supply chain to lessen the need for in-house expertise, facilitate the production process, reduce costs, and improve return on investment.